<!--[if lt IE 7]>
That means if less than IE7 only then use this code (effectively ie6 and below).
IE6 only understands hover on anchors so you can't have div hover effects as in my demo unless you provide ie6 with a little help.
Here is what I want to achieve.
I have two divs + 1 hover state div
If I hover over outer, it will activate inner.hover
That doesn't really tell me anything (without html) as it seem you have just one div that increases in size when hovered. If as Eric said the div is nested then Eric's code will apply the affect to the inner element when the outer is hovered. It won't work in IE6 though.
If you need something more sophisticated then study the code in my example as it has all the ingredients that you need to achieve this.